New Delhi, November 17
India could potentially save about USD 10 billion annually by expanding insurance penetration to those people and assets that are still uninsured, according to a report by global consultancy management firm McKinsey.
In a report put out by the agency after having a ground survey covering insurers and the people, they said Indian government could then redirect these saved funds to stimulate economic growth.
A significant portion of India's citizens and insurable assets remain uninsured, increasing the risks of high out-of-pocket expenses, placing a considerable burden on public finances.
Insurance provides dual benefits, offering financial coverage against exigencies and promoting long-term financial security.
"The sector not only has the ability to bolster India's socioeconomic development but can also channel capital toward developmental projects through the premiums collected," McKinsey argued in the report titled 'Steering Indian insurance from growth to value in the upcoming techade'.
In the report, McKinsey noted that comprehensive life insurance coverage could assist the government in alleviating the burden of providing ex gratia benefits to families affected by the unfortunate loss of life or livelihood due to accidents and other unforeseen events.
Rising costs of healthcare in India, a growing middle class, and greater awareness of the need for insurance coverage following the pandemic, and supportive regulations have combined to boost a rapid growth and profitability.
Insurance sector regulator Insurance Regulatory and Development Authority (IRDAI) has committed to achieving "Insurance for All" by 2047.
Despite the regulator's target of "Insurance for All" by 2047, the industry's penetration rate slipped from 4.2 per cent in 2022 to 4.0 per cent in 2023, indicating that its progress has not been on par with the country's economic growth, said the report, quoting publicly available data.
IRDAI is also working to improve insurance affordability. It has mandated lower premiums for sales through direct channels to encourage insurers to cut distribution costs and pass savings to policyholders.